Novation of unfinished projects to a subsidiary

In Community Housing Association v R & C Commrs [2009] BVC 338 the High Court reversed the previous decision of the FTT and found in favour of the appellant that there was a taxable supply by the appellant to their new subsidiary ‘Ventures’ when they assigned (novated) various unfinished construction projects. The third-party professional fees paid by the appellant prior to the assignments were cost components of that supply so that the VAT incurred on those fees could be recovered as input tax.

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